Marathon Oil (MRO) Sets 2015 Budget at $3.5B

Marathon Oil Corporation (NYSE: MRO) announced today a $3.5 billion capital, investment and exploration budget for 2015, a further 20 percent decrease since the Company's December capital budget update. By reducing exploration spending by more than half and continuing to focus on the Company's three high-quality U.S. resource plays, Marathon Oil's budget will support profitable investments that are expected to generate a total Company production growth rate, excluding Libya, of 5 to 7 percent year-over-year.

"With continued uncertainty in commodity pricing, Marathon Oil has taken decisive action to protect our optionality and position us to be a stronger E&P in the long term. Our commitment to portfolio management means we're well prepared to respond to the current environment, with an opportunity set concentrated on higher-margin assets that compete across a broad range of commodity prices," Marathon Oil President and CEO Lee Tillman said.

"Nearly 70 percent of our 2015 capital spending will be directed toward our three core U.S. resource plays, which continue to be among our highest-return investment opportunities," he noted. "This budget reflects an emphasis on investment selectivity, balance sheet flexibility and positioning for price recovery."

"We're resolutely focused on the fundamentals of capital efficiency, expense management and operating reliability along with service cost reductions to protect and expand our margins. We're also prepared to exercise further flexibility in our spend levels as pricing and the macro environment warrant. Our objective is clear--to deliver long-term shareholder value, regardless of the commodity price cycle, by focusing on those elements of our business which we control."

*Includes spending on exploration in the deepwater Gulf of Mexico, Gabon, Ethiopia and the Kurdistan Region of Iraq.

North America: Approximately $2.4 billion of the capital spending budget is allocated to the Company's three key U.S. resource plays. Activity plans are shown in the table below. Wells-to-sales ranges include wells drilled late in 2014 but not brought online until this year.

More than $1.4 billion in capital spending is earmarked for the Eagle Ford, where rig count is expected to drop from 18 in late 2014 to 10 by the end of the second quarter. Included in Eagle Ford spending is approximately $1.0 billion for drilling and completions.

The Company plans to spend $760 million in the Bakken in North Dakota. Drilling activity will be reduced to two rigs by the end of the first quarter, down from seven rigs at the end of 2014. Bakken spending includes approximately $550 million for drilling, completions and recompletions.

Spending of $226 million is targeted for the Oklahoma Resource Basins, which will also be down to two rigs by the end of the first quarter. This includes spending of approximately $200 million for drilling and completions.

International: The Company plans to spend $429 million on its international assets, primarily in Equatorial Guinea, the United Kingdom and the Kurdistan Region of Iraq.

Exploration: Marathon Oil has decreased exploration spending to $232 million on a targeted exploration program. The 2015 spending program represents a more than 50 percent reduction from 2014 levels. For the Gulf of Mexico, the Company expects to drill one company-operated well and participate in a non-operated appraisal well at Shenandoah. Seismic surveys are planned in Gabon and Ethiopia.

Oil Sands Mining: Marathon Oil expects to incur $95 million of costs for sustaining capital projects in its Oil Sands Mining (OSM) segment. A substantial portion will be offset by a carbon sequestration credit, resulting in reportable capital expenditures of $21 million. Marathon Oil holds a 20 percent outside-operated interest in the Athabasca Oil Sands Project.

Corporate and Other: The corporate budget is expected to total approximately $79 million, of which $40 million represents capitalized interest on assets under construction.

Production Guidance: For the full year, the Company forecasts 370,000 to 390,000 net boed for production available for sale from the combined North America E&P and International E&P segments, excluding Libya, and 35,000 to 45,000 net barrels per day (bbld) of synthetic crude oil for the OSM segment. Marathon Oil expects its resource plays to achieve production growth of approximately 20 percent in 2015, year over year.

First quarter production guidance reflects continued strong performance expected in the U.S. resource plays and the carry-in effect of 2014 investments, as well as a planned turnaround at the outside-operated methanol facility in Equatorial Guinea.

(a) This guidance excludes the effect of acquisitions or dispositions not previously announced. (b) Libya is excluded because of uncertainty around future production and sales levels. (c) Upgraded bitumen excluding blendstocks.

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